Introduction
The best practices in supply chain management include; developing an elaborate global supply system, controlling spending to enhance savings and achieve greater productivity and the reduction of transaction expenses.
Companies should aim at the alignment of both the supply network and acquisition process with organizational targets and objectives in order to ensure ultimate value for funds spent.
According to (Avery Vol. 2), “UTC, Intel, Procter & Gamble, Dow Chemical and IBM have been successful with integrated supply models”. These companies are seeking services from integrated global procurement firms for improved efficiency.
At Intel Corp., there is heavy reliance on Electronic Data Interchange with its suppliers. This technology is dependent on system and hardware compatibility. Improvements can be achieved through partnerships with its suppliers to put in place IT infrastructure that allows for seamless compatibility, to enhance information sharing.
Intel strives to reduce its operating costs through benchmarking and collaborations in overall company cost modeling with its suppliers. This supplier program has been successful in quality improvement.
To achieve greater results for both itself and its suppliers, Intel should consider the supplier’s unique operating environment and other factors that may make their overall cost model different from theirs, and make any modifications to their own model in order to boost the supplier’s morale.
There has been increased procurement pugnacity in collaborating with a single supplier to meet particular objectives of superior quality, sufficient and adequate quantity, and a desirable price. Intel’s sourcing strategy should be need based, with emphasis on the unique client requirements.
Intel sources its materials from different suppliers because of the diverse products that it deals in. However, it should strive to engage suppliers with a global presence and with the ability to supply multiple products and services. This will help in achieving the best practice of developing an elaborate global supply system.
The choice of such a supplier is a tricky affair as organizational requirements do change over time, and the decision is based on a number of factors, a combination of which can only be best suitable to a specific company. The supplier’s preparedness and their technical capacity dictate what strategy firms choose.
The unfolding events in the global supply market have presented a major challenge to Intel. It is costly to terminate current contracts to cater for changes in the market, because Intel enters into long-term contracts that are legally binding.
It should thus prepare contracts with provisions for termination based on prevailing market needs to avoid servicing contracts for materials and goods that it may not require as a result of market shifts.
Conclusion
(Flynn, Fraser, and Leenders M. 57) suggest that “an integrated supply strategy is depended on the IT infrastructure and systems used by a company and its suppliers”. Intel should source from regions where materials and services are lower.
They should in their own capacity, establish sustainable long-term and mutually beneficial relationships with local suppliers within their proximity. It should closely and continually monitor the performance of suppliers for better results.
Developing a continuous and up-to-date communication system will ensure that any changes are incorporated and adequately catered for. Measures should be put in place to address emergency requirements that arise due to the dynamism usually experienced, as a result of uncertainties in the global economy, political and legal systems.
References
Avery, S. (2009, February 13). MRO Sourcing Goes Global. Purchasing ,138(2), 48-52. Web. Retrieved from ProQuest.
Flynn, A., Fraser, J. P. & Leenders M. Purchasing and supply management (14th Ed). New York: McGraw Hill, 2010.Print.